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How Runaway Costs Could Sabotage Medicare’s Future

On August 17 , 2015 the Wall Street Journal published two separate articles on how Medicare payments for “ultra-high therapy” (defined as rehabilitation therapy greater than 720 hours ) constitutes a very serious threat to the solvency of the entire Medicare program. The first article is entitled “How Medicare Rewards Copious Nursing-Home Therapy” and the second is entitled “How Nursing Home Rehab Raises Medicare’s Tab”. Because the articles are fairly long, the links here are to the video version. The articles themselves can readily be found on Google or directly through the Wall Street Journal.

The information in these two articles is alarming and explosive. Here is one very telling example:

“During his 2013 California nursing-home stay, Jack Furumura became severely dehydrated and shed more than 5 pounds, partly because the staff didn’t follow written plans for his nutrition or the facility’s policies, a state inspection report shows. Still during many of his 21 days there, the 96-year old man suffering from dementia received two hours or more of physical and occupational therapy. This qualified as what Medicare terms an “ultra-high” amount of therapy which allowed the nursing-home operator to bill top dollar for his entire stay.”

This patient was too demented and too weak to benefit from two hours of PT and OT per day, so why did he get it? Because “ultra-high” rehab therapy (defined as 720 minutes per week) is funded at a substantially higher hourly rate than is “very high” or “low” therapy. Payment rules were adopted by Medicare in 1998 and phased in over the next few years. What the WSJ found was that in 2002, nursing homes used ultra-high on about 7% of days they billed Medicare. By 2013, 54% of all physical, occupational, and speech therapy was billed at the ultra-high rate. The fact that Mr. Furumura died just a few weeks after all this intensive rehab therapy shows how serious this issue has become.

The benefits of rehabilitative therapy in nursing homes are well established. Gait training by physical therapists can improve walking and help avoid falls. Occupational therapists help regain skills such as dressing and bathing. Speech therapists help stroke patients regain language skills. “There is very clear evidence that therapy works,” says Dr. Vincent Mor, a Brown University health-services professor and chairman of the independent quality committee at HCR ManorCare Inc., one the nation’s largest nursing-home operators, “but just because you get more therapy doesn’t mean your outcomes will be better. There is no evidence for it.”

More than two dozen current and former allied health professionals in 17 states told the Journal that managers often pressure caregivers to reach the 720-minute threshold. Some of these patients, the authors were told, are so vulnerable that having this much therapy actually makes them sicker. In December, the Justice Department joined a whistleblower lawsuit alleging HCR ManorCare pressured employees to provide unnecessary therapy and overbilled Medicare. What is alarming is that, while billing at 68% for ultra-high services is at the high end of the spectrum, it is not far from the norm in the industry. At Villa Valencia in Laguna Hills, California (the nursing home where Mr. Furumura stayed) the facility billed Medicare for ultra-high therapy for 65% of the days it billed Medicare in 2013. In 2014, Mr. Furumura’s family sued Five Star Quality Care Inc, the owner of Villa Valencia alleging that the nursing-home provided neglectful care, contributing to his death.

Given that Medicare will not pay for more than 720 minutes of PT, OT, or SLP work per week, the scam element of ultra-high billing is transparent. “There was pressure to pick up everyone and keep them as long as possible” up to the 720-minute mark says Shawna Pope, a Carbondale, IL. speech therapist who has worked part time for RehabCare at various facilities. After that, “you heard about it if you went over by even a minute.”

On Mr. Furamura’s final full day at Villa Valencia, his speech therapist noted that he “is unable to hold his head up for longer than several seconds.” In spite of his extreme dehydration and frailty, this former elementary school principal became agitated and tried to hit a therapist, the records show. That day, he received 61 minutes of physical therapy, 50 minutes of occupational therapy, and an hour of speech therapy.

The Medicare system that all senior citizens rely upon has become severely compromised by a reimbursement system that de facto incentivizes nursing-games to seek profits over optimal care. This has nothing to do with the clear benefits of rehabilitation therapy for the elderly but there is a risk that, as the public begins to understand the magnitude of this abuse, they will blame the therapists being pressured to do an excessive amount of therapy as much as the nursing-home operators, who are the real culprits here.

Robert Hoyt, Ph.D.
President
Allied Health Professionals LLC

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